Skellmax Confirms Strong Year

Skellmax Industries Ltd, the specialist
manufacturing and distribution company, that successfully
listed on the New Zealand Stock Exchange on 19 June 2002,
issuing 100 million shares to approximately 7000
shareholders, has confirmed that it achieved a strong
performance from all group activities in the 30 June 2002
year.

“Our results on a full twelve months basis
demonstrate that Skellmax is soundly based and trading
well,” says the chairman, Mr Keith Smith. “The strengths of
our two core businesses, Skellerup and Flomax during the
period, are fully reflected in the strong
performance.”

The initial trading period for reporting
purposes covers only the nine business days between 18 June
2002, the date of acquisition of the businesses forming
Skellmax Industries Ltd, and the end of the financial year
at 30 June 2002. Earnings in that brief period have been
disclosed in the company’s preliminary announcement to the
Stock Exchange in accordance with financial reporting
requirements. However, more meaningful for shareholders is
the annualised performance.

“The directors are pleased to
advise that earnings before interest and tax (EBIT) for the
twelve months ended 30 June 2002 was $19.21m which
represents an increase of approximately $3m, or 19%, on the
pro-forma result of the combined businesses for the year
ended 30 June 2001.”

“We are also able to confirm that
Skellmax Industries has delivered on the prospectus forecast
of $18.9m and actually improved on that by $312,000 or
1.7%.”

Skellmax Industries lifted its audited net profit
after tax to $12.842m, which is 1% ahead of the prospectus
forecast of $12.713m. Of this $12.465m is pre-acquisition
profit attributable to Viking Pacific Holdings Ltd.

The
balance sheet shows total assets at $64.55m, which is
approximately $1.46m lower than the forecast. Total
Liabilities stand at $46.83m of which current liabilities
stand at $16.83m and borrowings at $30m (being the loan
facility applied to partly fund the acquisition of Skellerup
and Flomax from Viking Pacific). Net assets stand at
$17.73m

Cash Flow from operating activities for the full
year at $14.78m was ahead of forecast by some $1.93m,
resulting in an improved cash-on-hand position as at 30 June
2002.

Directors note that due to Viking Pacific retaining
ownership of Skellerup and Flomax for all but two weeks of
the financial year ended 30 June 2002, no dividend will be
paid in 2002 in respect of that year. In the absence of
unforseen circumstances, it is still the intention of
Directors to commence paying Dividends from April 2003 at
the levels stated in the Prospectus.

As set out in the
prospectus it is the directors’ intention to establish an
Employee Share Scheme (known as a DF7 scheme). As soon as
Inland Revenue approval is received the directors will
proceed to issue two million shares to the Scheme.

“September 11 2001 had a significant negative impact on the
world and the major economies have been slower to recover
than earlier expected with global markets continuing to be
volatile throughout this year,” says Mr Smith. “There has
also been considerable commentary about US corporate
governance issues which has further unsettled markets
generally.”

“In the domestic market, general trading
conditions have been affected by the strengthening of the
New Zealand exchange rate against both the Australian and US
dollars and the apparent peaking of the current rural
economic cycle.” Mr Smith adds. “Not withstanding all these
unsettling factors, Skellmax Industries has continued to
perform well.”

The managing director, Mr Donald Stewart
states, “There has been a smooth transition from Viking
Pacific ownership to that of Skellmax Industries. This was
expected, as the core businesses, Skellerup and Flomax, have
been sister companies under previous management structures
since 1985. In bringing these two well-known and strongly
performing manufacturing and distribution businesses
together within Skellmax, we have maintained their separate
identities whilst gaining the efficiency benefits of a more
focused group structure.”

“In summary, we have
successfully integrated the two core companies and their
business units into one cohesive organisation,” says Mr
Stewart.

“We are operating in a challenging market but
Skellmax’s manufacturing processes are able to quickly
respond to changing circumstances by managing lead times,
length of manufacturing run and the length of the product
cycle. We are meeting our objective of satisfying customers’
needs by providing high quality products at a competitive
price.”

“The diversified range of activities within the
group helps to insulate Skellmax from cyclical fluctuations.
Skellmax combines Skellerup’s strength in manufacturing and
distribution of rubber, polyethylene and foam products with
Flomax’s strength in the manufacture and distribution of
vacuum pumps and accessories.”

“A strong market position
continues to provide a solid foundation for Skellerup where
the three business divisions, Agri, Industrial and Ultralon,
have all performed strongly in the June 2002
year.”

“Skellerup’s Agri division sells essential dairy
rubberware and other rural related products to the domestic
and international agri markets. This division is unlikely to
be affected by the prospect of lower payouts by NZ dairy
companies in the current year due to the consumable nature
of the dairy product range and the fact that approx 50% of
its dairy related revenues are derived from overseas
markets. We continue to attract new business, evidenced by a
recent substantial new export order for milking machine
liners. This will result in a 10% volume increase in the
production of liners.”

“The Skellerup Industrial division
services a wide range of industrial end-users in Australasia
and the Asia and Pacific Region. The Industrial division was
well ahead of its 2001 performance and is looking to
Australia for significant growth this year. We are having
continuing success with trialling additional products for
the Australian mining industry.”

Ultralon continues to be
well positioned in the marine, industrial and leisure
industries throughout Australasia and
internationally.

“Flomax has enjoyed an excellent year.
With its cost competitive manufacturing, established
customer/ distribution network, and its “brand” strength in
the Industrial market Flomax has further significant growth
prospects in the medium to longer term.”

“The Flomax dairy
division is looking to consolidate its position as a world
leader in the manufacture of dairy vacuum pumps. Whilst the
current domestic dairy market appears to be reasonably
demanding, there are a number of opportunities offshore that
will counter this.”

“The Flomax Industrial division is
well positioned, in its core US market, as the leading
manufacturer/distributor of rotary vane vacuum pumps for
installation on liquid waste removal trucks. The recent
acquisition of the Flomax blower product offers real growth
prospects for Skellmax. There are numerous industrial
applications for this technology and significant global
demand to be tapped.”

“Two months into the new
financial year both Skellerup and Flomax are performing to
expectation and we are confident that the group is on target
to achieve the EBIT forecast of $20.77m, as set out in the
prospectus.”

Skellmax Industries is an
international business with operations in New Zealand,
Australian and the United States. It comprises two core
businesses:

(i) Skellerup, a marketing, sales,
manufacturing and distribution business servicing the dairy
rubber, industrial rubber and rural supplies markets. It
also supplies rotomoulded polyethylene tanks and containers
to rural and industrial markets. It is the 3rd largest
manufacturer of dairy rubberware worldwide and the largest
manufacturer in that sector in New Zealand. The industrial
business unit distributes and manufactures specialised
rubber materials and related products for industrial and
building end uses such as conveyor belts, waterproofing
membranes, rubber extrusions and mouldings, latex products
and roofing materials.

(ii) Flomax a manufacturer and
distributor of vacuum pumps and associated equipment. It
manufactures rotary vane and liquid rung vacuum pumps for
the dairy milking machine markets as well as for industrial
markets including liquid waste, portable toilet, de-watering
and oil field sectors. Flomax is a world-leading
manufacturer of dairy vacuum pumps principally for
international OEMs. The Flomax industrial unit is focussed
on the US market where the Masport brand and distribution
network sets Flomax apart from its competitors.

During
2001 Flomax acquired the technology and manufacturing assets
of a Canadian-based manufacturer of blower pumps that are
used extensively in a diverse range of industries including
the truck-mounted pneumatic conveying and materials handling
sectors.

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